6 Sherritt International Corporation For the year ended December 31, 2016 Dated as of March 28, MAR

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1 6 Sherritt International Corporation For the year ended December 31, 2016 Dated as of March 28, MAR

2 CONTENTS Introduction i Forward-Looking Statements ii Scientific and Technical Information iii 1. Overview of the Business Three-Year History 3 2. Corporate Structure Name and Incorporation Intercorporate Relationships 8 3. Description of the Business Metals Oil and Gas Power Commercial and Technologies Environment, Health and Safety and Sustainability Employees Risk Factors Other Disclosure Relating to Operations in Emerging Markets Dividends Capital Structure Market for Securities Directors and Officers Transfer Agent and Registrar Material Contracts Interest of Experts Additional Information Additional Documents Audit Committee 79 Schedule A Glossary of Terms 81 Schedule B Technical Information 86 Schedule C Mandate of the Audit Committee 98

3 10MAR Sherritt International Corporation Annual Information Form For the year ended December 31, 2016 Dated as of March 28, 2017 Introduction This annual information form ( Annual Information Form or AIF ) contains important information that will help you make an informed decision about investing in Sherritt International Corporation. It describes Sherritt International Corporation, its businesses and activities as well as risks and other factors that affect its business. The information contained in this Annual Information Form relates to Sherritt International Corporation, its subsidiaries, its interest in an associate, and its proportionate interest in joint ventures for the year ended December 31, 2016, where applicable, unless otherwise indicated. The information, including any financial information, disclosed in this Annual Information Form is stated as of December 31, 2016 or for the year ended December 31, 2016, as applicable, unless otherwise indicated. In this Annual Information Form, references to the Corporation or Sherritt are to Sherritt International Corporation together with its subsidiaries, its interest in an associate, and its proportionate interest in joint ventures. References to management are, unless otherwise indicated, to senior management of the Corporation. Except as otherwise indicated, all dollar amounts in this Annual Information Form are expressed in Canadian dollars and references to $ are to Canadian dollars. As of December 31, 2016 and March 27, 2017, the United States/Canada Dollar exchange rates, as reported by the Bank of Canada, were US$0.74/Cdn.$1.34 (noon) and US$0.75/Cdn.$1.34 (close), respectively. Sherritt International Corporation 2016 Annual Information Form i

4 Forward-Looking Statements This Annual Information Form contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as believe, expect, anticipate, intend, plan, forecast, likely, may, will, could, should, suspect, outlook, projected, continue or other similar words or phrases. Specifically, forward-looking statements in this document include but are not limited to, statements respecting certain expectations regarding capital costs and expenditures; capital project completion dates; sales volumes; revenue, costs and earnings; sufficiency of working capital and capital project funding; completion of development and exploration wells; restructuring plan cost savings; and amounts of certain joint venture commitments. Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events, including commodity and product prices and demand; the level of liquidity and access to funding; share-price volatility; realized prices for production; earnings and revenues; development and exploration wells and enhanced oil recovery in Cuba; environmental rehabilitation provisions; availability of regulatory approvals; compliance with applicable environmental laws and regulations; debt repayments; collection of accounts receivable; and certain corporate objectives, goals and plans for By their nature, forward-looking statements require the Corporation to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that those assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. The Corporation cautions readers of this Annual Information Form not to place undue reliance on any forward-looking statement as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, changes in the global price for nickel, cobalt, oil and gas or certain other commodities; share-price volatility; level of liquidity; and access to capital; access to financing; risk of future non-compliance with debt restrictions and covenants; risks associated with the Corporation s joint venture partners; variability in production at Sherritt s operations in Madagascar and Cuba; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt s ability to replace depleted mineral and oil and gas reserves; the Corporation s reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation s corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt s operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation s social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; risks in obtaining insurance; uncertainties in labour relations; uncertainty in the ability of the Corporation to enforce legal rights in foreign jurisdictions; uncertainty regarding the interpretation and/or application of the applicable laws in foreign jurisdictions; legal contingencies; risks related to the Corporation s accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; failure to comply with, or changes to, applicable government regulations; bribery and corruption risks, including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti-corruption law; uncertainties in growth management; risks to information technologies systems, and certain corporate objectives, goals and plans for 2017; and the Corporation s ability to meet other factors listed from time to time in the Corporation s continuous disclosure documents. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this Annual Information Form and in the Corporation s other documents filed with the Canadian securities authorities. The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this Annual Information Form and in the Corporation s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and ii Sherritt International Corporation 2016 Annual Information Form

5 statements contained in this Annual Information Form are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement. Scientific and Technical Information Proven and Probable Mineral Reserves and Measured, Indicated and Inferred Mineral Resources have been estimated in accordance with the definitions of these terms adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM ) in May 2014 and incorporated in National Instrument Standards of Disclosure for Mineral Projects ( NI ) by Canadian securities regulatory authorities. All of the Corporation s oil and gas reserves have been evaluated, on an annual basis, in accordance with National Instrument Standards of Disclosure for Oil and Gas Activities ( NI ) and the Canadian Oil and Gas Evaluation Handbook (the COGE Handbook ) prepared by the Society of Petroleum Evaluation Engineers. Glossary of Terms Please see Schedule A of this AIF for a glossary of certain terms and abbreviations used in this document. Sherritt International Corporation 2016 Annual Information Form iii

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7 1. Overview of the Business Sherritt is based in Toronto, Ontario and is a leader in the mining and refining of nickel and cobalt from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations on the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The common shares ( Shares ) of the Corporation are listed on the Toronto Stock Exchange, trading under the symbol S. Sherritt International Corporation METALS Oil and Gas Power Corporate Nickel and cobalt mining, processing and refining Oil and Gas exploration and production Power generation Technical Services, development projects and head office 28MAR METALS Sherritt is an industry leader in the mining, processing and refining of nickel and cobalt from lateritic ore bodies. Sherritt has a 50/50 partnership with General Nickel Company S.A. ( GNC ) of Cuba (the Moa Joint Venture ) and a 40% interest in Ambatovy Minerals S.A. ( AMSA ) and Dynatec Madagascar S.A. ( DMSA and together with AMSA, the Ambatovy Joint Venture ) which owns a significant nickel operation in Madagascar. In addition, Sherritt has wholly-owned fertilizer, sulphuric acid, utilities and storage facilities in Fort Saskatchewan, Alberta, Canada ( Fertilizers ) that provide additional sources of income. The Moa Joint Venture mines, processes and refines nickel and cobalt for sale worldwide (except in the United States). The Moa Joint Venture is a vertically-integrated joint venture that mines lateritic ore by open pit methods and processes them at its facilities at Moa, Cuba into mixed sulphides containing nickel and cobalt. The mixed sulphides are transported to the refining facilities in Fort Saskatchewan, Alberta. The resulting nickel and cobalt products are sold to various markets, primarily in Europe, Japan and China. Pursuant to an expansion agreement signed in March 2005, the Cuban State granted the Moa Joint Venture resource concessions ensuring 25 years of production post expansion. At current depletion rate, the concessions of the Moa Joint Venture will reach their limit in The refinery facilities at Fort Saskatchewan provide inputs (ammonia, sulphuric acid and utilities) for the metals refinery, produce agriculture fertilizer for sale in Western Canada and provide storage facilities. The refinery facilities in Fort Saskatchewan have an annual production capacity of approximately 35,000 (100% basis) tonnes of nickel and approximately 3,800 (100% basis) tonnes of cobalt. The Ambatovy Joint Venture is one of the world s largest, vertically integrated, nickel mining, processing and refining operations utilizing lateritic ore. Sherritt is the operator of the mine and refining facilities and has as its partners Sumitomo Corporation ( Sumitomo ) and Korea Resources Corporation ( KORES ) (and together Sherritt, Sumitomo and KORES form the Ambatovy Partners ). The Ambatovy Joint Venture has two nickel deposits located near Moramanga (eastern-central Madagascar) which are planned to be mined over an 18-year period. Additionally, reclamation of low-grade ore stockpiles is expected to extend the project life by nine years. The Ambatovy Joint Venture has an estimated annual nameplate capacity of 60,000 tonnes (100% basis) of nickel and 5,600 tonnes (100% basis) of cobalt. Sherritt International Corporation 2016 Annual Information Form 1

8 1. Overview of the Business (cont.) OIL AND GAS Sherritt s Oil and Gas division explores for and produces oil and gas primarily from reservoirs located offshore, but in close proximity to the coastline along the north coast of Cuba. Specialized long reach directional drilling methods are being used to economically exploit these reserves from land-based drilling locations. Under the terms of its production-sharing contracts ( PSCs ), Sherritt s net production is made up of an allocation from gross working-interest production (cost-recovery oil) to allow recovery of all approved costs in addition to a negotiated percentage of the remaining production (profit oil). The pricing for oil produced by Sherritt in Cuba is based on a discount to Gulf Coast Fuel Oil 6 ( GCF06 ) reference prices. Sherritt is currently producing from two PSCs and is in various stages of exploration on two new blocks under PSCs with the Cuban government. In addition, Sherritt holds working-interests in several oil fields located in the Gulf of Valencia in Spain and an interest in the related production platform and a working interest in a natural gas field in Pakistan. POWER Sherritt s primary power generating assets are located in Cuba at Varadero, Boca de Jaruco and Puerto Escondido. These assets are held by Sherritt through its one-third interest in Energas S.A. ( Energas ), which is a Cuban joint arrangement established to process raw natural gas and generate electricity for sale to the Cuban national electrical grid. Cuban government agencies Unién Eléctrica ( UNE ) and Unión Cubapetróleo ( CUPET ) hold the remaining two-thirds interest in Energas. Raw natural gas that would otherwise be flared is supplied to Energas by CUPET free of charge. The processing of raw natural gas produces clean natural gas, used to generate electricity, as well as by-products such as condensate and liquefied petroleum gas. All of Energas electrical generation is purchased by UNE under long-term fixed-price contracts while the by-products are purchased by CUPET at market based prices. Sherritt provides the financing for the construction of the Energas facilities and is repaid from the cash flows generated by the facilities. The Energas facilities, which are comprised of the two combined cycle plants at Varadero and Boca de Jaruco, produce electricity using steam generated from the waste heat captured from the gas turbines. Energas electrical generating capacity is 506 MW. CORPORATE AND OTHER Commercial and Technologies In November 2016, Sherritt Technologies was merged with Sherritt s Global Marketing and Logistics group to form the Commercial and Technologies group ( Commercial and Technologies ). Commercial and Technologies provides technical support, marketing and bulk commodity procurement services to Sherritt s operating divisions and identifies opportunities for the Corporation as a result of its international activities and research and development activities. Its activities include evaluating, developing and commercializing process technologies for natural resource based industries, in particular for the hydrometallurgical recovery of non-ferrous metals, marketing Sherritt s refined nickel and cobalt finished products and securing critical raw materials and feedstocks for the hydrometallurgical operations. 2 Sherritt International Corporation 2016 Annual Information Form

9 1.1 Three-Year History 2014 Sulawesi Project On December 30, 2013, the Corporation notified its partner, a subsidiary of Rio Tinto plc, that it would not be pursuing the Sulawesi Nickel Project (the Sulawesi Project ) and its interest in the Sulawesi Project was terminated effective January 31, The Corporation has no further funding obligations with respect to the Sulawesi Project. Dividend On February 19, 2014, the Corporation announced the reduction of its quarterly cash dividend from $0.043 to $0.01 per common share in the face of persistently low commodity prices and to enhance the Corporation s financial flexibility. Shareholder Requisition On December 24, 2013, Sherritt s Board of Directors (the Board ) announced that it had received a requisition pursuant to section 105 of Business Corporations Act (Ontario) (the Requisition ). The Requisition requested that a special meeting of Sherritt s shareholders be called to consider removing from office certain of the independent directors of Sherritt currently in place, and electing nominees submitted by the requisitioning shareholders. On January 10, 2014, Sherritt responded to the Requisition, stating that it had determined that it is in the best interests of its shareholders to proceed to call the special meeting to be held on May 6, 2014 together with the annual general meeting. On January 10, 2014, Sherritt also announced the adoption of an advance notice by-law (the By-law ) relating to the nomination of directors by shareholders. The purpose of the By-law is to provide a fair and transparent procedure for nominating directors. The By-law ensures that Sherritt and its shareholders receive adequate prior notice of director nominations, as well as sufficient information on all the nominees, by requiring shareholders to submit a notice of director nominations within a prescribed period in advance of a shareholder meeting for the election of directors. This facilitates an orderly and efficient meeting process. The By-law is effective as of announcement and was ratified by the shareholders at the annual and special meeting of shareholders held on May 6, Shareholders of the Corporation voted for the nine directors nominated by management and in favour of management s recommendations for all other resolutions presented to that meeting of the shareholders. Ambatovy Joint Venture On January 22, 2014, the Corporation announced that the requirements for commercial production (an average of 70% of ore throughput based on nameplate capacity in the PAL circuit, over a 30 day period) had been achieved by the Ambatovy Joint Venture, and that effective February 1, 2014, Sherritt s share of operating earnings (losses) from the Ambatovy Joint Venture began to be recognized. On September 29, 2014, Sherritt filed a NI compliant technical report entitled NI Technical Report on the Ambatovy Nickel Project in Madagascar dated the same date (the Ambatovy Technical Report ). Extension and Award of Production-Sharing Contracts On May 29, 2014, the Corporation executed an agreement with the Government of Cuba to amend the PSC covering the Puerto Escondido/Yumuri oil fields for a ten year extension of the term to March The extension of the PSC applies to new wells drilled in the development area. The PSC will terminate with respect to existing wells as of its original expiry date of March Sherritt has now fulfilled its commitment under the terms of the amendment to drill a minimum of seven new wells in the development area. The program had poor results and no further wells are planned for the development area. Sherritt International Corporation 2016 Annual Information Form 3

10 1. Overview of the Business (cont.) In addition, on December 18, 2014, the Corporation signed two new PSCs with the Government of Cuba covering Block 8A in Central Cuba and Block 10 in the Bay of Cárdenas on the north coast of Cuba. The new blocks encompass areas of 967 and 261 km 2, respectively. The PSCs have 25 year terms. The initial exploration commitments for the two new PSCs include, among other things, the review and re-processing of existing seismic data and the acquisition and processing of new seismic data and the drilling of an exploratory well, in the case of Block 10. The Corporation released the preliminary results of initial exploratory drilling in March In respect of Block 8A, once the Corporation completes the initial phase of the exploration commitments, the Corporation may elect to proceed to the exploratory drilling phase or to relinquish the PSC in question.] The Corporation is awaiting final approval of the PSC for one additional exploration block relating to exploration prospects on the north coast of Cuba west of Havana. Coal Transaction Pursuant to an agreement dated December 24, 2013, on April 28, 2014 the Corporation completed the divestiture of its coal business for total consideration of $946 million. The operating assets of the coal business were sold to Westmoreland Coal Company for total consideration of $465 million. The Corporation s royalty portfolio and interest in coal development assets were sold to a group led by Altius Minerals Corp., for cash consideration of $481 million. The amount outstanding under the coal revolving credit facility, which was used primarily for letters of credit and short-term funding of the coal business, was repaid in full and subsequently terminated. The divestiture of the coal business was in keeping with the Corporation s strategy of focusing its portfolio of assets on areas of core strength, specifically in its Metals operations where it possesses unique capabilities in mining, processing and technical solutions and its Cuba platform, where it has successfully operated for over two decades, highlighted by the Cuban oil business. Debt Reduction A significant portion of the cash proceeds of the coal transaction was used to strengthen the Corporation s balance sheet through debt reduction. To this end, the Corporation made tender offers to purchase between $100 million and $150 million principal amount of its then outstanding 8.00% Senior Unsecured Debentures due November 15, 2018 (the 8.00% Debentures ) and between $200 million and $250 million principal amount of its 7.50% Senior Unsecured Debentures due September 24, 2020 (the 7.50% Debentures ), together with the solicitation of consent for certain amendments to the indentures under which those debentures were issued. The Corporation made payment on $150 million principal amount of its 8.0% Debentures and $250 million principal amount of its 7.50% Debentures and amended and restated the indentures governing the 8.0% and 7.50% Debentures on October 10, As of December 31, 2014, $250 million principal amount of the 8.00% Debentures and $250 million of the principal amount of the 7.50% Debentures remained outstanding. On October 10, 2014, the Corporation completed its previously announced offering of $250 million principal amount of 7.875% Senior Unsecured Notes due October 11, 2022 (the 7.875% Debentures, and together with the 8.00% Debentures and the 7.50% Debentures, the Debentures ). The net proceeds of the offering, together with cash on hand, were used to redeem all of the $275 million outstanding principal amount of its 7.75% Senior Unsecured Debentures due October 15, 2015, including the applicable make-whole premiums on November 10, Normal Course Issuer Bid On October 29, 2014, the Corporation received TSX approval of its previously announced normal course issuer bid ( NCIB ) to purchase up to 14,875,944 Shares (representing 5% of its Shares as of October 28, 2014) for cancellation over a 12-month period. As of December 31, 2014, the Corporation had purchased and canceled 3,960,300 million Shares under the NCIB at an average cost of $2.52 per Share for an aggregate cost of $10 million. The NCIB expired on November 2, Sherritt International Corporation 2016 Annual Information Form

11 Financings On November 30, 2014, the Corporation amended the terms of its $90 million Syndicated Facility to, among other things, extend the maturity date to November 30, 2015 and amend certain covenants. On November 30, 2014, the Corporation extended the maturity date of its Line of Credit to November 30, Tax Rate Reductions in Cuba During the first quarter of 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law. Prior Statutory Revised Statutory Operation Tax Rate Tax Rate Oil and Gas 30% 22.5% Power 30% 15% Metals Moa 45% 22.5% As a result of these changes, for the twelve months ended December 31, 2015 the Corporation recognized a tax recovery of $40.7 million in Oil and Gas and $2.6 million in the Moa Joint Venture. Dividend On September 17, 2015, the Corporation announced that as part of a comprehensive initiative to cut operating costs and capital spending, the $0.01 per Share quarterly dividend was suspended. The quarterly dividend has not been reinstated. Ambatovy Financial Completion Ambatovy financial completion was announced by press release on September 21, Ten certificates were filed to meet the financial completion criteria, covering a range of construction, operational, environmental, financial and legal obligations. With financial completion achieved, the Ambatovy Financing Agreements are now non-recourse to all of the Ambatovy Partners, including the Corporation. Financings On September 28, 2015, the Corporation amended the terms of the Syndicated Facility to extend the maturity date to November 30, 2016 and increase the maximum credit available from $90 million to $115 million. On September 28, 2015, the Corporation amended the terms of its Line of Credit to extend the maturity date to November 30, 2016 and increase the maximum credit available from $20 to $35 million. This facility was subject to the same financial covenants and borrowing rates as Syndicated Facility. The Line of Credit was repaid and terminated in February LME Acceptance On September 29, 2015, Sherritt received notice that the Ambatovy Joint Venture s finished nickel briquettes met the standards to qualify for delivery to London Metal Exchange ( LME ) warehouses. With the Ambatovy Joint Venture s LME acceptance, nickel briquettes from all of Sherritt s nickel operations are LME deliverable, allowing Sherritt or its customers the flexibility and commercial advantage of delivering nickel product to LME warehouses where logistics benefits exist or to mitigate short term variance in customer demand. Sherritt International Corporation 2016 Annual Information Form 5

12 1. Overview of the Business (cont.) Sale of SNC-Lavalin 5% interest in Ambatovy Joint Venture During the third quarter of 2015, SNC-Lavalin Inc. ( SNC ) exercised its put option to divest its 5% equity interest in the Ambatovy Joint Venture, selling its equity stake and share of the Partner Loans (defined below) to Sumitomo for approximately $600 million. Impairments In the third quarter of 2015, the Corporation recorded an impairment expense of $80.6 million on its oil assets in Cuba and Spain. This impairment was a result of lower oil price forecasts and poor drilling results from development wells in respect of the Puerto Escondido/Yumuri extension. In the fourth quarter of 2015, the Ambatovy Joint Venture recorded an impairment of US$2.4 billion (100% basis) due to lower forecast nickel prices. The impairment recorded at the Sherritt level is $1.6 billion after tax, consisting of $1.3 billion representing Sherritt s 40% share of the Ambatovy Joint Venture s impairment and $0.3 billion from the incremental carrying value of Sherritt s Ambatovy Joint Venture assets, primarily related to mineral rights acquired from Dynatec Corporation ( Dynatec ) in Ambatovy Joint Venture Funding Total post-financial completion cash funding provided by Sumitomo and KORES to December 31, 2016 was US$173.0 million pursuant to total post-financial completion cash calls of US$288.3 million, with cash funding of US$20 million and US$143.0 million provided during the three months and year ended December 31, 2016, respectively. Sherritt has not funded any portion of these cash calls and continues not to fund. Sherritt s unfunded amounts remain payable. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be set off against other amounts owed to Sherritt. By agreement amongst the Ambatovy Partners, Sherritt is not considered to be a defaulting shareholder under the Shareholders Agreement for the amounts not funded until May 2, 2017 while discussions continue regarding the partnership structure and future funding arrangements. As part of this agreement, shareholder funding contributed from and including December 15, 2015, will accrue interest at a rate of LIBOR plus 8.0% and will be paid in priority to the subordinated loans payable. Repayments of principal and interest will not be made prior to certain conditions being satisfied. Unpaid interest is accrued monthly and capitalized to the principal balance semi-annually. In August 2016, the Senior Lenders agreed to up to six principal payment deferrals totaling US$565.1 million (100% basis), which are to be repaid on a schedule starting in June 2021, or earlier subject to cash flow generation. Until June 2019, the Ambatovy Joint Venture will pay semi-annual interest payments only (approximately $56.0 million per year) and will not make any principal payments unless there is sufficient free cash flow after required deductions. Deferred principal will be subject to a 2% accrued interest calculated from the date of each deferral. Financings In April 2016, Sherritt amended the terms of the Syndicated Facility to revise certain financing terms and covenants. In July 2016, the extension of maturity dates of each of the Debentures by three years from 2018, 2020 and 2022 to 2021, 2023 and 2025 respectively (the Extension ), was approved. The applicable interest rates and existing covenants for the Debentures remain unchanged. The Debenture holders that voted in favour of the Extension received, at the option of the Debenture holder, either: (a) cash consent consideration equal to 2% of the principal amount of the debentures; or (b) warrants for each $1,000 of principal amount of debentures held. The warrants have a term of five years, are not listed on any exchange, have an exercise price of $0.74 per Common Share and are exercisable at any time. Cash consent fees paid to Debenture holders that voted in favour of the extension and other transaction fees totaled $14.8 million. In addition, 19.1 million warrants were granted to Debenture holders that elected for this option with a fair value of $0.43 per warrant which totaled $8.2 million. 6 Sherritt International Corporation 2016 Annual Information Form

13 Moa Joint Venture Acid Plant Construction of the third acid plant at the Moa Joint Venture was completed in the second quarter of 2016, with commissioning activities and performance testing undertaken throughout the third quarter of In September, the acid plant fulfilled all performance tests producing at a 100% rate over a 72 hour period and was deemed fully commissioned. The project was concluded within the established construction timeline and completion within the budget of US$65.0 million (100% basis), and was Moa Nickel s first capital project to be fully financed by a Cuban financial institution. Oil and Gas Impairment During the third quarter of 2016, the Corporation recognized an impairment loss of $8.5 million ($6.6 million net of tax) for the write-down of the Puerto Escondido/Yumuri extension cash-generating unit, within the Oil and Gas segment, to its recoverable amount. The impairment was the result of a decrease in internally forecasted oil reserves for the Puerto Escondido/Yumuri extension due to two oil wells being shut-in as a result of low oil production. Its recoverable amount was determined to be negligible based on a value in use analysis at September 30, Power Operating Lease Extension In December 2016, Power received approval from the Executive Committee of the Council of Ministers of the Republic of Cuba to extend the operating term of the Varadero power facilities from 2018 to Financing In January 2017, $76.3 million of the $90.0 million Syndicated Credit Facility was renewed to January 30, 2018 with the remaining $13.7 million due to mature in April The maximum credit available will further decrease by approximately 4% quarterly beginning April 28, Collectively, these reductions in available credit will result in outstanding credit of $63.6 million at January 30, Sherritt International Corporation 2016 Annual Information Form 7

14 2. Corporate Structure 2.1 Name and Incorporation Sherritt International Corporation, formerly Sherritt International Corp., was incorporated on October 4, 1995 by articles of incorporation under the Business Corporations Act (New Brunswick). The articles of incorporation were amended in 1995 and in 2004 to provide for the Corporation s current name and capital structure. The articles provide for an authorized capital consisting of an unlimited number of Shares. On June 14, 2007, Sherritt and Dynatec were amalgamated under the Business Corporations Act (New Brunswick), with the amalgamated corporation named Sherritt International Corporation. On August 1, 2007, Sherritt continued under the Business Corporations Act (Ontario) by filing articles of continuance. On December 1, 2010, Sherritt amalgamated with two of its wholly-owned subsidiaries, with the amalgamated corporation named Sherritt International Corporation. On June 3, 2016, Sherritt continued under the Canada Business Corporations Act by filing articles of continuance. Sherritt International Corporation s registered and head office is at 181 Bay St., 26 th Floor, Toronto, ON M5J 2T Intercorporate Relationships % of Voting Securities Held (directly or Name Jurisdiction indirectly) Ambatovy Minerals S.A. Madagascar 40 Dynatec Madagascar S.A. Madagascar 40 Energas S.A. Cuba International Cobalt Company Inc. Bahamas 50 Moa Nickel S.A. Cuba 50 Sherritt International Oil and Gas Limited Alberta 100 Sherritt International (Cuba) Oil and Gas Limited Barbados 100 The Cobalt Refinery Company Inc. Alberta 50 8 Sherritt International Corporation 2016 Annual Information Form

15 3. Description of the Business 3.1 Metals The Corporation s Metals operations ( Metals ) consists of (i) a 50% interest in the Moa Joint Venture; (ii) a 40% interest in the Ambatovy Joint Venture; and (iii) Fertilizers. Sherritt possesses unique capabilities in mining, processing and technical solutions, and provides metallurgical services to mining and refining operations worldwide (excluding the United States). The Corporation also owns certain fertilizer, sulphuric acid, utilities, storage and other assets located in Fort Saskatchewan, Alberta. For the year ended December 31, 2016, Metals incurred a loss from operations of $178.5 million on revenue of $652.1 compared to a loss from operations of $1.9 billion (after an impairment of $1.6 billion, net of tax) on revenue of $805.1 million for the year ended December 31, The Ambatovy Joint Venture incurred a loss from operations of $150.9 on revenue of $264.8 million compared to a loss from operations of $1.9 billion on revenue of $332.0 million for the year-ended December 31, The Moa Joint Venture and Fertilizers incurred a loss from operations of $28.4 million on revenue of $339.3 million compared to a loss of from operations of $4.4 million from operations on revenue of $412.6 million for the year ended December 31, Capital spending of $32.9 million (50% basis) at the Moa Joint Venture and Fertilizers includes expansion capital related to the construction of a third acid plant. Capital spending of $33.1 million (40% basis) at the Ambatovy Joint Venture focused on sustaining capital for mining and production equipment, specifically the purchase of an excavator and articulated dump truck in the fourth quarter as well as spending on the tailings facility. During 2016, the Moa Joint Venture incurred exploration and development expenditures of US$179,474 (50% basis), compared to US$363,552 (50% basis) in MARKET OVERVIEW Nickel In recent years, the worldwide nickel market price experienced a continued decline as global production has exceeded demand with significant growth in low grade ferronickel, more commonly referred to as nickel pig iron ( NPI ). Nickel prices on the London Metal Exchange ( LME ) were lower in 2016 than in The LME average cash settlement price for 2016 was US$4.36 per pound, a 19% decrease from the 2015 average of US$5.37 per pound. Nickel opened 2016 at US$4.00 per pound and closed the year at US$4.54 per pound, and traded in a range between US$3.24 and US$5.39 per pound. Nickel is a heavy silver-coloured metal whose principal economic value lies in its resistance to corrosion and oxidation and excellent strength and toughness at high temperatures. Nickel is used in the production of stainless steel, which accounts for approximately two-thirds of worldwide nickel consumption. Nickel is also used in the production of industrial materials, including non-ferrous steels, alloy steels, plated goods, rechargeable batteries, catalysts and chemicals. In 2016, approximately 86% of world primary nickel production was consumed in North America, Europe, Japan and China. Nickel demand is strongly influenced by world macro-economic conditions, which in turn influence the state of the world stainless steel industry, the single largest consumer of nickel. According to CRU International Limited, a leading provider of market analysis in the mining and metals industry, in 2016, Vale S.A., a Brazilian company, was the world s largest producer of refined nickel. MMC Norilsk Nickel, a Russian company and Glencore, a Swiss company were the second and third largest producers, respectively. Combined production from the Moa Joint Venture and the Ambatovy Joint Venture was 75,033 tonnes (100% basis) or approximately 3.94% of annual world refined nickel production, making Sherritt one of the world s top 10 largest nickel producers on a 100% basis, which is approximately 1.6% lower than in The Moa Joint Venture s 2016 production totaled 32,928 tonnes or approximately 1.73% of 2016 annual world refined nickel production. The Ambatovy Joint Venture produced 42,105 tonnes of nickel in 2016 or approximately 2.21% of 2016 annual world refined nickel production. Current world supply of refined nickel is estimated to be approximately million tonnes per annum. World nickel supply is broadly classified into primary and secondary nickel. Primary nickel is further subdivided into refined nickel (Class I) having a minimum nickel content of 99%, and charge nickel (Class II) having a nickel content of less than 99%. The main physical forms of Class I nickel are electrolytic nickel (cathode and rondelles), pellets, briquettes, granules and Sherritt International Corporation 2016 Annual Information Form 9

16 3. Description of the Business (cont.) powder. Class II nickel includes ferronickel, nickel oxide sinter and utility nickel. Secondary nickel is the nickel contained in scrap metal, principally stainless steel scrap. World nickel supply has also been impacted by the growth of NPI in China. NPI is the lowest purity of what is considered refined nickel (as low as 2% nickel content) and is primarily used in China to make stainless steel. CRU estimates that NPI production in China was approximately 355,000 tonnes of nickel equivalent in 2016 and an additional 85,000 tonnes from Indonesia. Total NPI production has been reported to have increased by approximately 130,000 tonnes in 2016 partially offsetting the 181,000 tonnes of curtailment in the nickel market since Most major refined nickel producers supply nickel at grades ranging from 98.4% to 99.9% in purity. The Moa Joint Venture s and the Ambatovy Joint Venture s sintered nickel briquettes, produced at a minimum of 99.8% purity, are well suited for stainless steel and alloy steel production and certain chemical applications, and are expected to continue to be sold to such industries. The Moa Joint Venture s steel grade (unsintered) nickel briquettes having a typical purity of 99.4% nickel are well suited for stainless steel production and foundry use. Cobalt Cobalt is a hard, lustrous, grey metal that is used in the production of high temperature, wear-resistant super alloys, catalysts, paint dryers, cemented carbides, magnetic alloys, pigments, rechargeable batteries and chemicals. The cobalt market is much smaller and more specialized than the nickel market. The cobalt market has been subject to significant price volatility due to the lack of a liquid terminal market. The LME introduced a 99.3% cobalt contract in February 2010 and in January 2017 announced that it was increasing the minimum purity to 99.8% to assist in contract adoption. Cobalt contract trading volumes were down 8.9% in 2016 over 2015 and the transition to LME pricing continues to be slower than expected. The LME reported that7,894 tonnes of cobalt traded on the LME in 2016, representing approximately 21.6% of global refined metal production or 8.6% of total refined metal and chemical production. Other base metal contracts on the LME experience trading volumes of 50 or more times total production indicating that the LME cobalt contract is still in its infancy and remains a secondary pricing mechanism to the more widely accepted Metal Bulletin, as discussed below. Cobalt supply has evolved over the years from a reliance on unstable output associated with copper production in central Africa, to more diverse supply sources with material coming from a wider geographic area. Refined mainly as a by-product of nickel and copper mining, approximately 64% of cobalt global production is processed through copper refining and 35% through nickel refining. The copper belt located in the Democratic Republic of the Congo (DRC) contains close to half of the world s cobalt reserves. Australia, Cuba, Zambia, Madagascar, New Caledonia, Canada, Russia and Brazil hold most of the remainder. Cobalt production does not respond to cobalt demand. In the longer term, significant increases in supply are planned to be brought on-stream from new large-scale international projects targeting copper production. The Moa Joint Venture and the Ambatovy Joint Venture are producing finished cobalt (briquettes and powder) at 99.9% purity, which exceeds the current LME specification. Based on data from CRU International Limited, worldwide supply of primary cobalt for 2017 is estimated to be approximately 102,534 tonnes, an increase of approximately 4.2% from Sherritt is among the leading suppliers of metallic cobalt to world markets. In 2016, cobalt was produced by ten Cobalt Development Institute ( CDI ) member companies, with additional supplies coming from a variety of other companies. The non-cdi sources included individual companies such as Norilsk in Russia, Votorantim in Brazil and QNI in Australia, as well as production from multiple refiners in China. Sherritt s operations supplied 6,967 tonnes (100% basis) (3,694 tonnes (100% basis) supplied by the Moa Joint Venture and 3,273 tonnes (100% basis) by the Ambatovy Joint Venture) or approximately 6.8% (3.6% and 3.2% attributable to the Moa Joint Venture and the Ambatovy Joint Venture respectively) of world primary cobalt in The Corporation is the world s 2nd largest producer of refined cobalt metal and metal powder (100% basis). The relative importance of the different uses of cobalt has changed over the years, with demand for older, more established uses, such as pigment, magnets and carbides showing only modest, if any, growth over the period. Many of these traditional uses are strongly reliant on industrial growth for demand increases, so demand for these uses tends to rise and fall with global economic performance. Over the last decade growth in the chemical sector, primarily in battery chemicals, has increased the demand for cobalt. The world s reliance on global communications in the form of mobile phones and tablet technology has been a driving force for increased cobalt consumption. Strong recovery from the superalloy sector has also helped the market remain in relative balance. Over the long term, positive 10 Sherritt International Corporation 2016 Annual Information Form

17 growth is expected in the rechargeable battery sector (hybrid and electric vehicle applications) and coal-to-liquid and gas-to-liquid catalyst sectors. The Metal Bulletin Low Grade average cobalt price rose strongly during the year starting at US$10.30 per pound and closing the year at US$14.60 per pound. In 2016, Low Grade average cobalt was quoted by the Metal Bulletin in a range between US$10.30 per pound and US$14.60 per pound, averaging US$11.78 (Low Grade high/low year average) per pound, 9% lower than the average price for 2015 of US$13.00 per pound. In 2016, the LME daily cash settlement price averaged US$11.77 per pound with a low of US$9.85 per pound and a high of US$14.92 per pound. The LME price is considered the lowest openly traded market price for metallic cobalt meeting a minimum purity level of 99.3% with limited specifications for impurities. MOA JOINT VENTURE The Moa Joint Venture is a vertically-integrated nickel and cobalt mining, processing, refining and marketing joint venture between subsidiaries of Sherritt and GNC, a Cuban company. The operations of the Moa Joint Venture are carried on through three companies: Moa Nickel S.A. ( Moa Nickel ) owns and operates the Moa, Cuba mining and processing facility The Cobalt Refinery Company Inc. ( CRC ) owns and operates the Fort Saskatchewan, Alberta metals refinery International Cobalt Company Inc. ( ICCI ) located in Nassau, Bahamas, acquires mixed sulphides from Moa Nickel and other third party feeds, contracts with CRC for the refining of such purchased materials and then markets finished nickel and cobalt. Sherritt and GNC each hold 50% of the issued and outstanding shares of each of these companies, the financial results of which are equity accounted into Sherritt s consolidated financial statements. Moa Nickel mines lateritic ore by open pit methods and processes it at its facilities at Moa into mixed sulphides containing nickel and cobalt. The mixed sulphides are purchased, free on board, from Moa Nickel by ICCI pursuant to the terms and conditions of an agreement (the Mixed Sulphides Supply Agreement ), which expires June 30, 2027, between Moa Nickel and ICCI. The mixed sulphides from Moa Nickel are transported by ocean freight to Canada and then by rail to Fort Saskatchewan. CRC refines this material together with other nickel and cobalt feed materials purchased by ICCI pursuant to the terms and conditions of a tolling agreement between ICCI and CRC, which expires June 30, 2027, with ICCI retaining ownership of the product throughout the refining process. Once the mixed sulphides and other feed materials are refined by CRC, the resulting nickel and cobalt products are sold by ICCI, directly or indirectly, to various markets, primarily in Europe, Japan and China. ICCI does not sell nickel and cobalt into the United States due to an embargo. For further information, please see 3.7 Risk Factors Risks related to Sherritt s Operations in Cuba. In 2016, approximately 92% of the nickel input and 88% of the cobalt input for CRC s refinery were derived from mixed sulphides from Moa Nickel. Under the terms of the Mixed Sulphides Supply Agreement, the price paid by ICCI to Moa Nickel is discounted from, in the case of nickel, the official LME cash price and, in the case of cobalt, the price received from ICCI customers. ICCI also purchases other nickel and cobalt feed materials from third parties for refining at CRC s refinery and subsequently sells the finished products in international markets. Status under Cuban Law Under the terms of its constitution, the Cuban state is the unconditional owner of all land and natural resources lying within Cuban territory, and in accordance with section 15 thereof, it is authorized to sell land in Cuba when it is in the interest of the development of the country. The property and assets of the Moa Joint Venture were conveyed through a deed of sale, which was approved by the Executive Committee of the Council of Ministers. The Moa Joint Venture also received a mining concession by means of a decree or resolution granting exploration and mining rights. The deed of sale was later registered in the registry of property of Cuba, and Moa Nickel was registered in the commercial registry and the registry of the Chamber of Commerce of the Republic of Cuba. Sherritt International Corporation 2016 Annual Information Form 11